The world is three years out of the great meltdown of 2008. Yet, despite what many fear is an imminent second dip into recession, the lessons of that dreadful year continue to be obscured and distorted by Big Money.

It’s typical to depict these corporate entities — Big Money, Big

Pharma — as faceless, profit-driven forces, whose power and influence crush all efforts to rein in their reckless practices. The wizards at the helm are usually veiled from the public, resorting mostly to backroom manipulation.

One face

Sometimes, though, a face peeks out from behind the curtain. And last week, that face belonged to Jamie Dimon, president and CEO of JPMorgan Chase.

The U.S. financier reportedly blew his top at Bank of Canada governor Mark Carney during closed-door meetings over the weekend to forge a solution to the European debt crisis.

According to Britain’s Financial Times, “The atmosphere was so bad after the meeting that Lloyd Blankfein, chief executive of Goldman Sachs and head of the Financial Services Forum bankers’ group, which arranged the session, emailed (Carney) to try to smooth relations.”

But Carney appeared unrattled.

On Sunday, he stuck to his guns during a speech to global bankers

at the Institute of International Finance.

According to the Times, he said he can’t see how “backsliding” on implementing new protection measures would help the global economy.

Don’t like the rules

In a nutshell, financial institutions around the world — particularly the U.S. — have been under pressure since 2008 to accept new rules that would buffer the impact of any future financial collapse.

The moves are meant to prevent taxpayers from holding the bag.

One of the proposed measures would require that banks carry a minimum level of tangible equity, or capital, to back up their activities.

Now, this seems to make a lot of sense.

It’s the equivalent of a homeowner having to provide a five or 10 per cent downpayment on a house.

In fact, it seems outrageous to think financiers can play with astronomical amounts of money on paper — paying themselves obscene bonuses — while having nothing tangible to back it up.

This is why taxpayers, rather than shareholders, had to bail them out in order to keep the economy afloat.

To many high-rollers in the U.S., however, the minimum capital proposals are oppressive and counter-productive. Dimon even calls them “un-American” — as if the world should care whether they conform to contrived notions of patriotism.

At least one mainstream business journal finds Dimon’s combative approach over-the-top, and even wrong-minded.

Stabilizing factor

The editors at Bloomberg.com place themselves squarely on the other side of the fence.

“To our minds, the strongest argument against (the latest proposal) is that it doesn’t go far enough,” they wrote.

“The best research available has found that much higher capital ratios would be good for the economy because the benefit of reducing the frequency of financial disasters far outweighs any costs.”

That pretty well nails it.

But the free-for-allers in the U.S. remain a huge obstacle.

When a Texas governor can call Social Security a “Ponzi scheme,” while ignoring the worldwide menace of unregulated financial wheeling and dealing, no one is safe.

It’s time for Jamie Dimon and his ilk to wake up and smell the coffee. And to make sure there are some real beans behind those coffee futures.

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Ed

September 30, 2011 - 15:07

Well done Mark Carney. This is not the time to back away from these guys who risk everyone's savings and investments to line their own pockets with obscene unearned bonuses. I personally do not care if they do get paid hundreds of millions per year BUT not at the expense of other peoples. If they do not like the rules they can go find another job. As a matter of fact I believe what some of them did was illegal and they should be charged.
Great article Peter.